A home loan balance transfer is when one transfers their outstanding home loan amount from their existing lender to a new lender for favorable terms and conditions. You can opt for a balance transfer if your current lending institution is charging a high-interest rate on home loans and is unwilling to negotiate.
The benefits of a home loan balance transfer are –
- Low-interest rates – Home loans come with an extended tenor, and an individual ends up paying a substantial amount as total interest payable. To avoid the financial strain, one can transfer their outstanding loan amount to another lender who is providing home loans at more affordable interest rates.
However, if you are transferring your home loan to reduce your interest rates, it should be done during the initial years when the interest component and the principal amount are almost equal. In the later years, the principal amount increases and the interesting part reduces so balance transfer won’t be much useful.
- Top-up loan facility – Some financial institutions also offer additional funds to borrowers known as top-up loans when you opt for a home loan balance transfer with them. These loans are unsecured credits without any end-use restriction. Also, no additional procedure or documents are needed to avail such credits.Aside from the above benefits, you can adjust your tenor period as per your convenience when you opt for a home loan balance transfer.
Similar Read: 4 Solid Ways to Reduce Your Home Loan Burden
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